Saying I Do: How Marriage Changes Your Finances

There’s plenty of excitement to be had when getting married. But before people tie the knot, it’s important to understand the not-so-romantic side of marriage. Sadly, many who fail to consider the financial changes and responsibilities that come from marriage end up divorced because of it.

To help you get an idea of how your life will change financially after getting married, here are the 3 major areas you’ll be affected in the long run after you say “I do.”

Health Care / Insurance

Once you get married, either you or your spouse must decide whose health insurance policy you’ll both be sticking with. This can be a big deal for some couples and usually boils down to which of the two receives the most benefits out of their policy. Worth mentioning is that employer-backed policies usually provide more at a lower cost than policies for individuals.

In fact, there are many types of insurances that provide better deals to married folks. Since statistics show that unmarried drivers are two times more likely to have an accident than married drivers, car insurance providers give espoused couples significant rate reductions.

Home insurers and long-term care insurance providers also look at marital status when deciding your rate and might even offer a flat discount. You might even get a discount for pet insurance once you think it’s time for the kids to have a dog or cat.

Taxes

What Uncle Sam gets from your paycheck can change once you get married, for better or for worse. There are various factors that determine whether you get a marriage bonus, which means your tax bill goes down, or if you get hit with marriage penalties and must pay more. The fact is, figuring out which of the two sides you’ll be on before uniting in wedlock is tricky.

It mostly depends on if you plan to file your taxes in on one of two ways: Married Filing Jointly (MFJ) or Married Filing Separately (MFS). If you both work and file an MFJ, it’s possible to end up paying more since the two incomes are averaged together. In other words, the spouse with more income is brought down to a lower income bracket while the one with a lower income is pulled up to a higher bracket.

Despite this, more than 95% of couples file jointly anyways because they’re more likely to get a huge tax deduction. Tax penalties are actually uncommon and you’ll probably receive a marriage tax benefit up to 6% or more. It all depends on how much you and your partner make per year.

Retirement

Sharing your life with someone offers you more flexibility in terms of retirement saving options. This includes more access to a variety of Social Security options not available to single people. An example is being able to claim some benefits based on your significant other’s earnings.

For instance, your husband or wife can get 50% of your benefits if what they’d receive is greater than their own benefits. If one of the spouses passes away, the other spouse has the option of receiving the Social Security benefit of their deceased loved one if it’s more than their own.

The only big advantage of staying single into retirement is the possibility of earning more before your Social Security benefits are taxed. While a married couple’s benefits are taxed once their income is over $32K, two single people can earn up to $50K (both $25K) before their benefits are taxed.